Greece exit, proof game for EU stability

What once seemed unthinkable is now being discussed openly in Brussels. Greece could leave the eurozone following parliamentary elections on Sunday. All sides are playing a high-stakes game of poker.

Those who want to discover what Eurogroup head Jean-Claude Juncker thinks about Greece’s future have to brace for some contradictions.

“I don’t envisage, not even for a second, Greece leaving the Euro area. This is nonsense; this is propaganda,” Juncker said at a May press conference. But a different tone came just a few minutes later, when he said, “Our unshakeable desire is to maintain Greece in the euro area. We will do everything possible to this effect.”

But Greek elections to be held on June 17 may place the future of the country firmly outside of the EU’s hands.
Eurogroup head Jean-Claude Juncker

If push comes to shove

Discussions about a Greek departure from the euro were absolutely taboo a few months ago. Now such scenarios are being played out publicly in some cases – by Eurogroup head Juncker as well as in the European Commission. Trade Commissioner Karel de Gucht said in an interview with a Belgian newspaper a few weeks ago that experts from the European Central Bank and European Commission are already working on what would happen if “Greece doesn’t make it.”

The President of the European Commission, Jose Manuel Barroso, said in an interview with an Italian newspaper on May 11: “If you’re a member of this club but don’t play by the rules, then it’s better that you go.”

Though not naming Greece specifically, the context of the remark made it absolutely clear that Barroso referred to Greece.
Head of Greece’s radical left SYRIZA party Alexis Tsipras

Buffering up Spain?

The rules of the club are, in this case, the austerity reforms desired by international lenders to Greece. And the lenders have not shown themselves open for bargaining. Most Greeks, however, want to remain in the currency union but have grown weary of the seemingly endless ramifications of the austerity approach. That results in an apparent contradiction: yes to the euro, but only with better conditions. And Greece may confirm its commitment to that position with Sunday’s elections.

Fotis Kouvelis, head of the relatively small Democratic Left party in Greece, dared to enter the lion’s den and said, “What we need is a politics that serves to keep Greece in the eurozone while also freeing us from certain terms of the measures and regulations.”

That stance puts Kouvelis in the moderate camp. Alexis Tsipras, head of the Coalition of the Radical Left and a possible election winner, has stressed that he would declare the austerity program null and void if he becomes prime minister. His chances are not bad.

It’s no coincidence that the offer of aid to Spain came just ahead of the Greek elections, said Janis Emmanouilidis, an expert on Greece at the European Policy Center, a think tank in Brussels, “in order to brace for the consequences in case the future Greek government would make demands of the other side that it is unwilling to concede.”

Feelings range from sympathy to anger

And most partners in the EU have taken a firm stance when it comes to Greece. Germany’s Finance Minister Wolfgang Schäuble said a few weeks ago in Brussels: “If Greece decides not to remain in the eurozone, we will not force them to.”

Luxembourg’s Foreign Minister Jean Asselborn has called urgently on Greeks to elect parties willing to accept the austerity program.

“Otherwise I will feel deeply sorry for the Greek people. It will come to the point where there’s no turning back,” he said.

Others make it clear that they are upset with the country. Austria’s Finance Minister Maria Fekter told journalists recently that since a country cannot simply leave the eurozone, it must leave the EU as a whole.

“Greece would have to reapply for its membership, and then we would enter into negotiations to see whether Greece is at all suitable for being in the EU,” she said, in reference to the falsified statistics Greece presented when it joined the currency union.

A turning point

Most politicians and experts have warned Greece against the consequences of an exit. Janis Emmanouilidis fears that Greece would face even greater suffering.

“Returning to the drachma would lead to enormous upheaval,” since the euro has served as a brace “that even during the difficult periods of the crisis has held society together,” Emmanouilidis said.

But if Greece wants to hold on to the euro, and the EU would like the country to remain in the currency union, then shouldn’t a compromise be possible? Emmanouilidis believes it is a possibility, noting that even Tsipras has tempered his rhetoric to a degree. But he still sees a risk in what he terms a “political wreck” – namely, even a compromise could be rejected by some EU states or by the Greek people. And that could lead to a situation in which “the crisis intensifies, with more countries getting pulled in so that ultimately the euro itself comes to a tipping point.”

Again and again, commission members and politicians have said that Sunday’s election is a matter for Greece, and no one should dictate to the country what it should do. But the tension in Brussels is palpable: it’s as if everyone wanted to tell the Greeks, “Don’t let us influence you, but just make sure you do the right thing.”

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